Friday, December 9, 2016

City Council, December 12th - Park Front Subsidy

This version of City Council meets for the last time this year on Monday.

In their last hurrah, they'll presumably confirm the $3/4 million subsidy for the new Park Front "flatiron" building at the Boise Redevelopment.

New view: Looking west from midblock
In Governing magazine a few months back was a piece about subsidies:
Urban real estate developers always ask for subsidies whether they need them or not, and cities often provide them even when they’re not needed. Why else would cities subsidize billion-dollar sports stadiums to house teams that are worth billions and that are owned by sports tycoons worth billions?

That’s why cities need to know a lot about the economics of private real estate development deals, specifically when and why projects pencil out or don’t. It’s something that, amazingly, cities know little about. If you’re going to subsidize a developer, for example, you should only do it when you know you can’t get the project you want done any other way. Alternatively, if you’re going to soak a developer for impact fees or other community benefits, you should do so only when you know it won’t kill a project you otherwise want. That’s why cities should have a lot of financial analysis capacity -- not just to balance their own budgets, but to understand whether developers are balancing their own budgets on the backs of the taxpayers. [italics added]
Criticism of the proposed Park Front subsidy has focused on it as an instance of "crony capitalism," a boodle favor for a former member of City Council and current executive with the Chamber of Commerce.

Commenting on the criticism, another person asked
Would another, outside developer, receive this same treatment? The project does seem to deserve some incentive, since that seems the norm for development that promises increased tax revenue and an improved downtown....[would] a project like this would receive similar treatment if an outside group were building it?
And the answer is probably yes, the same subsidy would be extended to any other developer who asked for it.

The issue here is almost certainly not that a former member of City Council is extracting special favors, but rather that we lack ways, and have not structured urban renewal incentives, to discriminate between valuable projects that truly need help to get off the ground, and projects that would happen anyway and just want the extra slush funding. Our application of urban renewal subsidies, as with enterprise zones and other tax incentives, is too crude and unnecessarily subsidizes too many projects that are already positioned for or have reasonable chances of success.

The Park Front building already has pre-leasing commitments from at least two businesses, and it does not seem like any stall in construction has not been long enough yet to be proof that it truly depends on new urban renewal subsidies. In fact, the staff report notes
Three of the four building floors are leased or under negotiation with only 6,000 sf available for lease. Estimated construction start date is December 2016 with a targeted completion of September 2017.
So, really: Is this the best use of Urban Renewal subsidies?

In any case, the City should also be reporting on the total subsidy for developments. What is the total City support for
  • The Southblock portion of the development?
  • The Nursing Home portion of the development
  • The indirect subsidy from the Park Block purchase?
  • Other direct or indirect subsidies on the Boise parcel?
There's a lot of subsidy and support here for the whole Boise thing, and it would be good to know its total extent, as well as when the properties will begin generating taxes for the City.

Stalled project at State and Commerical
via Nathan Good Architects
Contrast this with the stall on the building proposed for State and Commercial. It was proposed three years ago.

The delay is evidence that project could absolutely use urban renewal subsidy to jump start it.

So from here anyway, criticism of the Park Front subsidy is probably better directed towards the City's total framework as insufficiently nuanced, and directed less to the qualities of the particular applicant's personal relationships to City Council and the Establishment.

Other Items

A different kind of subsidy is also on the agenda.

The City had announced earlier this year it wanted to sell off a couple of parcels of land along Liberty Road between Browning and Skyline. One of them was sold earlier this year for $50,000. The other is the site of a community garden, and would displace it. The Sunnyslope Neighborhood Association
voted unanimously to request that the City discontinue efforts to market the property at 4229 Liberty Road South and remove the property from the City’s surplus list. The Association has approached the City to seek a long-term solution for continued use of the property as a community garden.
This time, it is not a former member of Council who is a principal in the project, but an incoming member of Council, who will represent Ward 7.

So is the request also using a special relationship to Council in order to achieve favorable policy decisions? (This is a reason policy over people has seemed preferable here! Focusing on people just leads to trouble and finger-pointing and makes it more difficult to judge things on the merits.)

More interesting, though, is the question of how we envision community gardens. Are they permanent? This seems to move in that direction. It's community garden squatting! Or like an instance of "adverse possession," right?

Do we conceive of community gardens as uses for vacant properties, which then move to a new vacant property when a higher use for the first lot is found? In the letter from the neighborhood association they write that they had originally understood its impermanence, but then lost it: "it had been on the market for so long that we had developed a false sense of security with the garden."

Or we do conceive of community gardens as already the highest use for a lot? As an important commons, something more like a park.

The lots on Liberty are near the Sunnyslope shopping center and would be candidates for semi-walkable, multi-family housing. Taking one of them off the market could harm incrementally our ability to create more affordable housing. The matter isn't just the lost revenue to the City from the sale, but the lost property tax revenue and the incremental addition to our stock of housing or commercial property. There are opportunity costs.

There aren't clear answers here - but that also means the sentiment for retaining the community garden right there may not be as clear perhaps as its proponents think.

Not on Council Agenda, but interesting nonetheless, is a strange note about a new Strategic Plan:
The City of Salem is undertaking a strategic plan to articulate the mission, vision, values, and goals for the organization to help the City sustain delivery of core services as the community and the organization grow and change.

Stakeholder engagement is a critical part of this effort. The City of Salem is asking big questions as part of a strategic planning process and we’d like your help. Please join us for the first of two community open houses on December 15, from 5-6:30 PM at Broadway Commons in the Grant Room.

This work will chart a course, in a transition plan, for the City moving forward based on findings from an assessment of current conditions in our community, impacts of anticipated change in the region, and perspectives of residents, community leaders and elected officials.
In the first paragraph, what is "the organization" distinct from "the City"? What is going on here? It reads like there's some shadow purpose totally being evaded in the text! It's full of the usual bureaucratic tropes, but woefully short of meaningful detail. It just seems weird. And there has been no prior announcement about any City "strategic plan." Very strange. (SCV did just post a video taken from a Budget Committee meeting in November. Is it being funded out of some City discretionary slush fund? Maybe that's why it hasn't been before Council? It's just odd.)

Still, it's an opportunity to tell the City to prioritize human-scaled things more: More support for walking, biking, transit and the kinds of development patterns that are consistent with that. And less subsidy for autoism. Both Just Walk and SCV have picked up on that already!

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